Investing in high yield dividend stocks can provide a steady income stream and a potential cushion during market volatility, but it's important to not buy a stock based solely on the yield. In some cases, an unusually high dividend yield can be a warning sign that the stock price has dropped significantly, which might indicate underlying financial trouble that could imperil future payouts.
When you're buying dividend stocks, look for companies with strong cash flow, low debt, and consistent earnings growth. Let's take a look at two high-yield dividend stocks to consider adding to your portfolio right now.
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1. Enterprise Products Partners
Enterprise Products Partners (EPD 0.67%) pays an annual forward dividend of $2.18 per share, and a yield of approximately 6.8%. Bear in mind, the average dividend-paying S&P 500 stock pays a yield in the ballpark of 1.2%. The company has a strong track record of increasing its dividend for 28 consecutive years.
As a midstream energy company, Enterprise Products Partners generates steady cash flow and profits from the transportation, storage, and processing of natural gas, natural gas liquids, crude oil, and petrochemicals. These operations are backed by long-term, fee-based contracts that include minimum volume commitments and protect its revenue from the direct volatility of commodity prices. Enterprise Products Partners is actively capitalizing on the massive energy demands of artificial intelligence (AI) data centers by using its extensive pipeline infrastructure to transport the natural gas required to power them.
The company is widely considered a dominant player and the leading infrastructure provider in the natural gas liquids market. Its dominant position in this sector is a result of its extensive, integrated network of pipelines (over 50,000 miles), processing plants, fractionation facilities, and export terminals, especially in the U.S. Gulf Coast and Permian Basin regions. Its vertically integrated system allows it to capture margins across the entire value chain, from the wellhead to export terminals.
NYSE: EPD
Key Data Points
Long-term investors should be aware that Enterprise Product Partners is structured as a master limited partnership (MLP). As a unitholder in an MLP (which is a pass-through entity for tax purposes), you receive a Schedule K-1 form each year that details your proportional share of the MLP's income, deductions, losses, and credits. It's more complex than a standard 1099 form used for stocks and requires additional reporting on your personal tax return.
MLPs often send out K-1s later than corporations send 1099s, sometimes as late as mid-March or later, which can delay your tax filing or necessitate filing an extension. When you eventually sell your MLP units, the process becomes more complicated, as the gain may be treated as both ordinary income and capital gains. A tax professional can help you manage all these complexities.
Looking at its most recent fiscal year, Enterprise Products Partners reported exceptional financial results in 2024. The company generated $56.2 billion in revenue and $5.97 billion in net income in the 12-month period, representing year-over-year increases of 13% and 5.5%, respectively. The company also reported record adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $9.9 billion and record distributable cash flow of $7.8 billion.
Enterprise Product Partners has delivered a total return including dividends of around 120% over the trailing five-year period alone. In that time frame, its dividend payout has risen by around 20%.
The company is wrapping up a major capital expenditure phase on new projects that will become operational soon. This, combined with declining capital spending, is expected to lead to a significant surge in free cash flow starting in 2026, which management plans to return to investors through increased distributions and a larger unit repurchase program ($5 billion is authorized so far). Now could be a great time for investors to consider a position in this top energy stock.
2. Kinder Morgan
Kinder Morgan (KMI +2.10%) was once a pioneer of the MLP structure in the 1990s and operated several MLPs, including Kinder Morgan Energy Partners and El Paso Pipeline Partners. In November 2014, the company completed a massive $71 billion consolidation merging all its MLP entities into a single publicly traded corporation.
The company pays an annual forward dividend of $1.17 per share, and boasts a yield of approximately 4.3%. Kinder Morgan has paid a dividend for 14 years, with its history of payments dating back to 2011, the year of its initial public offering. The company has increased its dividend for eight consecutive years at this point and plans to increase it again in 2026. Kinder Morgan is one of North America's largest energy infrastructure companies and specializes in the ownership and operation of critical oil and gas pipelines and terminals.
The company owns an interest in or operates approximately 79,000 miles of pipelines across North America. This includes about 66,000 miles of natural gas pipelines, making it the largest transmission network of its kind in the region.
Kinder Morgan also owns or operates roughly 9,500 miles of refined products and crude oil pipelines and approximately 1,500 miles of carbon dioxide pipelines. And the company operates a network of 139 terminals that store and handle a wide variety of products, including renewable fuels, petroleum products, chemicals, and vegetable oils.
NYSE: KMI
Key Data Points
It holds interests in more than 700 billion cubic feet of working natural gas storage capacity, which accounts for roughly 15% of total U.S. capacity. The company transports approximately 40% of all natural gas consumed in the United States. Approximately 95% of its revenue is generated through long-term, fixed-fee take-or-pay contracts, which require customers to pay for reserved capacity whether they use it or not.
Kinder Morgan has a project backlog of $9.3 billion, with approximately 90% dedicated to natural gas projects designed to meet growing demand from liquified natural gas exports and AI data centers. Kinder Morgan is aggressively building out natural gas infrastructure, including major pipeline projects like Trident and Elba Express, and strategically positioning their vast pipeline network to fuel these power-hungry facilities.
In 2024, Kinder Morgan reported about $2.6 billion in net income against $15.1 billion in revenue, and generated $4.9 billion in distributable cash flow. The stock has delivered a total return of about 150% in the trailing five years, and its dividend has grown by 11% in that stretch of time.
